CITIC Dameng Holdings Limited provided earnings guidance for the half year and year ending December 31, 2012. The company expects that the Group may record a significant decline in its results for the half year and the year ending December 31, 2012 as compared with the corresponding periods in the year 2011. Should there be no strong recovery in the remaining two months to December 31, 2012 from the deterioration of the financial performance as experienced by the Group in the first ten months of this year, it is expected that the Group will record a loss attributable to shareholders for the half year and the year ending December 31, 2012.

The Group recorded an unaudited profit attributable to shareholders of HKD 28,571,000 for the half year ended December 31, 2011 and HKD 408,572,000 for the year ended December 31, 2011. The reasons for the above adverse changes are mainly: as detailed in the Company's annual report for the year ended December 31, 2011, the Group recorded a gain on bargain purchase from the acquisition of subsidiaries amounting to HKD 262,775,000 in the year 2011. No such similar item is expected in the year ending December 31, 2012; as disclosed in the interim report of the Company for the half year ended June 30, 2012, the selling price of the Group's products dropped significantly in the six months ended June 30, 2012 because downstream steel industry was hardly hit by weak demand for steel products amid the slower economic growth in the PRC.

During the same period, the costs of the Group's products could not be reduced significantly due to upward pressure of raw materials price and labour cost. During the four months ended October 31, 2012, there was further decline in the selling price of products as steel industry continued to suffer. The combined adverse effects further eroded the gross profit margin significantly in the four months ended October 31, 2012.